CHINA'S leading polyester firm Yizheng Chemical Fibre will benefit from the continuing strong demand for polyester staple fibres and polyester chips.
Listed on the Hong Kong bourse on March 29, Yizheng is the largest manufacturer of polyester in China and one of the five largest polyester producers in the world.
Its two main products are staple fibre and polyester chips, which account for 51 and 49 per cent of output respectively. A small quantity of polyester filament is also made.
Prices of staple fibres and chips have risen recently and are now 70 per cent higher than last year's average. Production is running at full capacity and all products are sold in advance. This allows Yizheng to deliver most orders by way of pre-payment and avoids the triangular debt dilemma that is tainting many Chinese state-owned enterprises.
However, given the pent-up demand in the domestic market, foreign sales are likely to drop to less than seven per cent of total sales for 1994, or about US$40 million (HK$308.8 million).
This is against US$180 million per annum required to import raw materials and other production equipment, resulting in a shortage of US$140 million. This shortfall will mainly be met through open market purchases, making Yizheng's profits susceptible to depreciation of the yuan.